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AirportPreparing for Five Major Risks in Retirement
March 13, 2026
As an SDCERS member, you are fortunate to have access to valuable retirement benefits – both your pension and any other employer-sponsored defined contribution plans. However, even if you save diligently, retirement comes with potential risks. Planning ahead can help you prepare for them and protect your long-term financial security. Below are five common retirement risks and steps you can take to address them:
- Sustainable Retirement Income
A pension provides guaranteed monthly income, but it may not cover all future expenses. Estimate your anticipated expenses in retirement and identify all potential income sources (e.g., pension benefit, Social Security, other retirement savings), and use that data to determine whether your projected retirement income will support your desired lifestyle. - Investment Risk
If you participate in retirement savings plans (e.g., 401(k), IRA, 401(a), 457(b)), your investment strategy may change over time. Many people take on more investment risk earlier in their careers and shift toward a more conservative, diversified approach as retirement approaches. It’s also important to consider sequence of returns risk. A market downturn early in retirement can have a lasting impact if withdrawals occur while investments are down. - Tax Risk
Taxes can affect how long your retirement savings last. A common withdrawal strategy is to:
• Use taxable accounts first (e.g., savings or brokerage accounts);
• Then draw from tax-deferred accounts (e.g., traditional 401(k)s and IRAs), which are typically subject to required minimum distributions around age 73; and
• Use tax-free accounts (e.g., Roth accounts) last. - Healthcare Costs
Healthcare is often one of the largest expenses in retirement. Medicare does not cover everything, and long-term care can be costly. Planning options may include long-term care insurance, Health Savings Accounts (HSAs), and Medicare supplemental insurance. - Estate Planning
Estate planning helps ensure your wishes are followed and can ease the burden on your family. Keep wills and beneficiary designations current, review your assets periodically, and ensure loved ones know where to find important documents. If you receive a pension, beneficiaries should also notify SDCERS promptly after your passing – both so your estate doesn’t incur overpaid pension benefits and so your continuance beneficiary, if applicable, can begin receiving their monthly payments.